Stryker Corporation is a leading medical technology company headquartered in Kalamazoo, Michigan, that trades on the New York Stock Exchange. Use the following information on Stryker and seven other similar companies (indicated by their ticker symbols) to value Stryker’s common stock as of December 31, 2013. Stryker Corp. ($ millions)
Sales .............................................................................  9,021
Net income .................................................................. 1,616
Number of common shares (millions) .....................    378
Earnings before interest and tax .............................  2,163
Tax rate .......................................................................  22.3%
Book value of equity .................................................   9,047
Book value interest-bearing debt ...........................   2,764

Transcribed Image Text:

Stryker BAX BDX COV MDT SNN STJ ZMH Comparison of Stryker with comparable companies: 5-year growth rate in sales (%) 6.1 4.3 2.4 0.6 4.2 2.7 4.7 2.9 5-year growth rate in EPS (%) 8.4 3.0 0.9 3.5 11.6 7.7 17.8 4.5 Analysts' projected growth (%) 9.1 8.0 9.0 NA 6.6 9.9 10.7 8.4 Interest coverage ratio (X) 15.6 12.2 7.8 10.8 12.0 81.2 10.7 15.0 Total liabilities to assets (%) 53.6 30.5 42.5 67.2 58.5 46.4 57.0 34.2 Total assets ($ millions) 15,743 25,869 12,035 19,619 37,231 5,819 10,248 9,581 Indicators of Value 23.2 Price/earnings (X) MV firm/EBIT(1-Tax rate) (X) 17.8 18.8 23.1 20.3 15.8 24.6 20.8 18.5 21.7 23.9 20.5 17.7 23.5 28.1 21.5 MV firm/sales (X) 3.5 3.1 3.1 3.5 4.1 3.0 3.9 3.8 MV equity/BV equity (X) 3.1 4.5 4.2 3.3 2.9 3.2 4.1 2.5 MV firm/BV firm (X) 2.0 1.8 2.1 1.8 1.8 2.3 2.1 1.8 MV = Market value; BV = Book value. Market value is estimated as book value of interest-bearing debt + market value of equity. Earnings are fiscal-year earnings.